Q & A Highlights

Q: Have you finished adjusting your customer portfolio to remove high-touch, low-margin ones? Or is that a permanent effort? A: From where we are today, yes. However, if there is more requirement due to an influx of traceability, we have another layer of the onion that we can deal with. But at this point, we think we're where we want to be.

Q: Can you give your current thoughts on adjacent regulated markets, such as restaurants and healthcare? A: We evaluate both market size opportunity and profitability. Follow-on products to the same customers are more profitable for us. We have some new follow-on products that will be available after the 1st of the year, which are very exciting. We will continue to push into other verticals while bringing forward these products that will sit on top of our traceability solutions.

Q: Can you give updates on your international efforts and opportunity? A: We are currently focused on executing our current workload with thousands of suppliers. However, we believe that the dominant US platform over the next few years will have the greatest opportunity outside the US. Our approach is likely to be in the form of ventures outside the US rather than our own personnel.

Q: Would you ever consider a one-time dividend? A: It's not off the table, but we prefer to provide a quarterly dividend that investors can count on. If we had a massive cash influx, we would consider a special dividend, but our primary focus would be on increasing the quarterly dividend.

Q: What are you doing today with artificial intelligence, and how might it improve your future top and bottom line? A: Most of our AI work is directed toward our own people to help them make better decisions and focus on customers. We have a couple of AI-based opportunities that could expand the spans of control of our people, potentially doubling the size of the company without additional personnel.

Q: Can you give an updated number on how much it costs to run the business? A: It takes $12 million to run the business. This number may fluctuate with investments in cybersecurity, sales, and marketing, but over time, it will remain around that percentage.

Q: What are your current thoughts on M&A? A: We are laser-focused on executing our current workload. Taking our eye off the ball to do an acquisition could risk our execution. For now, we are focused on bringing in the 4,000 suppliers we have contracted.

Q: What gives you the confidence in your ability to handle compliance and supply chain to augment traceability? A: We have customers with whom we are contracted that have established requirements for their suppliers. We have around 4,000 suppliers that will be brought into the network over the next 12 to 18 months. This contractual obligation drives our revenue and preeminence in the traceability scene.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.